Category: Chile

Chile’s state-run oil company Enap has signed two new contracts with Ecuador’s state-owned Petroecuador and has committed to invest $35 million in the near future to help increase its oil production in Ecuador. Enap has been operating in Ecuador since 2002. The contracts were signed during a state visit to the country by Chile’s president, Michelle Bachelet.

Chile’s family-owned supermarket chain Deca has decided to pull out of a deal to sell its stores to the country’s number one retailer D&S. Although a representative for the owning Rendic family insisted the decision was an independent one, D&S blames the failure of the deal on the anti-monopolies commission which had the transaction suspended for 45 days to analyze claims that the market was becoming concentrated in the hands of too few retailers. D&S currently controls 33% of the domestic market. Rendic Hermanos, which owns Deca, said the company is looking to focus on growing the business themselves.

Chile’s president, Michelle Bachelet, has confirmed that Chile will be joining the Community of Andean Nations (CAN). It will join officially towards the end of August at the same time as signing a free trade agreement with Peru. CAN currently comprises Bolivia, Ecuador, Colombia and Peru. Venezuela withdrew from CAN earlier this year in protest against the free trade agreements being signed by its members with the US.

The Chilean economy expanded by only 4.8% in the first half of the year compared with the same period last year, the lowest first-half growth since 2003. The economy grew by 4.5% in June. Analysts say government growth forecasts of 5.7% for the year now look overly optimistic and have cut forecasts to around 5.2% in light of the disappointing results. The slowdown in growth has been blamed on the poor performance of industry and mining and a cooling off of domestic consumption. Industrial production grew by 4.0% in the first six months of the year, with copper production up only 3.4%. The Central Bank’s hike in interest rates last month, which have curbed investments, have also contributed to the slowdown and most analysts predict the Bank will leave rates unchanged at their August 10 meeting.

Chilean Banco Security has succeeded in selling $40.5 million subordinated inflation-linked local bonds from an offering that was more than twice oversubscribed, according to the bank. The bonds carry an annual interest rate of 4.57% and mature in 2028. The securities earned an A+ rating from agency Fitch Rating. The offering was managed by Valores Security SA Corredores de Bolsa.

Chile’s BancoEstado has also issued local inflation-linked bonds worth $85 million (UF2.5 million). The bonds carry a maturity of 25 years and an annual interest rate of 4.2%. Fitch Ratings awarded the bonds an AA+ rating. BancoEstado Corredores de Bolsa managed the issue, money from which will be used to fund the bank’s expansion plans.

Chile’s consumer prices rose 0.5% in July, compared with June, faster than the average forecast by economists. Higher gas prices have contributed to a rise in energy costs to drive up prices overall and the threat of hikes in the cost of natural gas from Chile’s main supplier Argentina looks set to increase inflationary pressures. The price rise in July took cumulative inflation for the year to 2.6% and inflation for the 12 months to end-July to 3.8%, near the top range of 4% set by the Central Bank.

Chilean retailer Falabella has issued $286 million worth of local inflation-linked bonds (UF8.5 million). The company issued the securities in two series: Series E carries a five-year maturity and an interest rate of 3.74% and Series F a 21-year maturity and interest rate of 4.42%. Falabella is using the capital-raising to help fund its ambitious $1.13 billion, four-year expansion plans. The Chilean retailer is looking to overtake rival regional retailer Walmex of Mexico, currently the sector leader in Latin America.

Chile’s leading salmon producer, AquaChile, is to join forces with Alitec, a subsidiary of Dutch animal nutrition provider Provimi to produce fish-food at a plant in the south of the country. The companies have signed a joint venture agreement to work together to develop saltwater fish feed at Alitec’s existing plant at Pargua. Salmon is Chile’s fourth-largest export after being introduced into the country in the 1980s. Chile hopes to overtake Norway to become the world’s leading producer of the fish.

Chilean retailer Falabella is to issue local inflation-linked bonds worth $287 million (UF8 million). The company will issue the securities in two series: Series E will carry a five-year maturity and Series F a 21-year maturity. Falabella is using the capital-raising to help fund its ambitious expansion plans. The Chilean retailer is looking to overtake rival regional retailer Walmex of Mexico, currently the sector leader in Latin America, with a market value of $26 million compared with Falabella’s $7.4 million.